Scottsdale Mortgage Info

Scottsdale mortgage holders often ask questions about the best way to prepay their home loans – and save money in the process. Follow these tips and you can save thousands of dollars in interest over the life of your mortgage. In addition, prepaying your loan will mean it will pay off earlier than the original term.

Scottsdale Mortgage Holders Can Save Thousands

Prepaying your mortgage by just one additional payment a year can reduce a 30-year loan down to roughly a 23-year term. When you pay bi-weekly (every other week) for example, you're really making 26 half-payments (52 weeks divided by 2 equals 26 weeks.) You could also make an additional payment at some point during the year to effectively make 13 monthly payments instead of 12. Still, some people like to add 1/12 of their mortgage payment to each monthly payment and accomplish the extra payment that way.

Some mortgage lenders charge a fee for prepayments. Hopefully, if you already have a mortgage, yours doesn't contain a prepayment clause. The majority of Scottsdale mortgage lenders allow prepayment without penalty. If you're shopping for a mortgage or are considering refinancing, avoid signing a mortgage with a prepayment penalty.

Prepaying your mortgage works best when you pay the same amount each month. Decide whether you're going to pay an extra $50, $100 or whatever amount you choose and stick with that amount for at least a year. When you change the prepayment amount, just make sure you keep a written record and check your statement closely to see that the extra amount has been subtracted.

Regardless of how you make any extra payment(s) – or if you decide to make a lump-sum payment – make sure your lender enters the payment properly. If you question how, or if, it was applied, contact your Scottsdale mortgage lender immediately so they can either explain it to you or correct it if it's in error.

 

You can find a lot more Scottsdale mortgage information in our Scottsdale Mortgage Info section of articles to your right just below the Scottsdale Real Estate Categories. We also update mortgage news constantly on Twitter and Facebook. We hope you'll check us out there as well.

The Scottsdale mortgage lending market experienced something unusual in the past sixty days. The Federal Reserve raised the interest rate back in December 2015. Since that time, mortgage interest rates have dropped to their lowest level in three years! Most economists and mortgage lenders pointed out at the time that an increase in the Fed Funds rate wouldn’t necessarily translate to an increase in mortgage rates. However, few saw the resulting lowering of mortgage rates in their crystal balls.

Scottsdale Mortgage Rates: Time to Refinance?

The Scottsdale mortgage lending market has experienced something very unusual. Is now a good time to refinance?

Mortgage interest rates usually drop when volatility fueled by uncertainty in the stock market makes investors sell their higher-risk stocks in favor of buying safer bonds. When bond prices move higher as a result of the brisk buying, the yield on those bonds go down. A quick look at the stock market over the first 45-50 days of this year shows exactly what’s happened. Investments in U.S. Treasury bonds and mortgage bonds have been strong – for the time being.

In December 2015, fixed rates on 30-year conventional conforming loans were roughly 4%. Due to increasing bond trades, interest rates on this and other mortgage products have dropped as much as .5%. To better put that in perspective, a half-point interest rate reduction can significantly reduce monthly payments. It results in an $85 savings per month on a $300,000 Scottsdale mortgage, $170 per month on a $600,000 mortgage and a $900,000 mortgage payment will be reduced by $253.

As if these savings weren’t reason enough to consider refinancing, according to some analysts it’s possible that rates could fall even lower over the next several months. But there’s more to refinances than just interest rates. Other factors come into play like income and assets, property eligibility, and home equity. In the past, specifically in other post-housing crisis interest rate drops, some homeowners were unable to refinance. Many people were underwater with their mortgages – they owed more than their home was worth. In addition, other problems contributed to their inability to refinance such as income instability, slow credit and changing lending policies and guidelines.

In today’s Scottsdale mortgage environment, refinances are more prevalent. Home prices have either leveled off or are still increasing, unemployment has dropped and income growth is on the upswing. In addition, cheap oil prices have helped keep inflation low, and mortgage lending guidelines are more flexible than during any previous post-crisis rate reduction. All these reasons and more make it easier, more conducive and a smarter move to refinance than perhaps ever before.

Let’s take a look at the reasons home owners refinance. First and foremost, of course, is to lower their interest rate, which lowers the monthly mortgage payment. However, there are other reasons to take into consideration when you’re contemplating refinancing.

Reduction of loan payoff term.
Borrowers looking to reduce the length of time they have to pay on their mortgage should consider refinancing a 30-year loan to a 15-year loan. Naturally, a shorter term loan carries with it higher payments – though the interest rate is usually lower. With today’s even lower interest rates, it may be surprising at how affordable a 15-year loan term can be.

Cash accessibility.
As your home equity builds over time and as a result of higher home values, the nest egg your home represents can be substantial. A “cash out” refinance can give you access to your home’s equity to do with it as you wish. Many homeowners refinance their Scottsdale mortgages to make investments, purchase additional real estate, pay for college expenses for their children, or make home improvements.

Debt consolidation.
For qualified borrowers, non-housing related debt can be included into a home refinance. These debts could include auto loans, credit card debt, student loans and other consumer debt. Debt consolidation can help improve a credit score by showing that certain accounts have been paid in full. In addition, by rolling existing debt into a mortgage the borrower is able to deduct that additional interest, converting non-tax-deductible debt into tax-deductible debt.

Elimination of mortgage insurance or cancellation of a second mortgage.
Homeowners who purchased homes with a mortgage with less than a 20% down payment were probably required to carry mortgage insurance. Mortgage insurance protects the lender from the borrower defaulting on the mortgage loan payments. If the home’s value has appreciated enough to where the loan-to-value ratio (LTV) is 80% or less, a borrower can refinance the mortgage and eliminate the mortgage insurance requirement. For borrowers who have a second mortgage on their homes, refinancing is an excellent way to combine both the first and second mortgages into a new first mortgage.

Now that you know the reasons homeowners typically refinance, let’s examine the steps in the actual process itself.

Decide on a Scottsdale mortgage lender.
While your existing lender may be a good place to start, there are a variety of lenders offering similar interest rates and refinancing options. Choose the one that best fits your needs. Most rate quotes are based on a refinance being closed within 30-45 days. If you need to lock in your interest rate for a longer time period before you close, you can expect the rate to be slightly higher. Therefore, it’s important to get your lender the needed documentation and paperwork as soon as possible.

Assemble the documentation.
When it comes to documentation, a refinance is really no different than a purchase money mortgage. Federal lending regulations require that mortgage lenders have current employment and income verification, asset and liability statements and an updated credit report.

Appraise your home.
There are two parts to the refinance equation: one is the borrower, the other is the collateral on which the mortgage is made. Of course, the borrower must qualify, but the home has to, too. Your Scottsdale mortgage lender will require an appraisal to determine the value of your home. They then use that appraisal amount to decide whether the loan amount you’re seeking is within their guidelines concerning the LTV ratios for refinances.

Closing costs.
Refinancing is always an exercise in comparing the total payment savings against the costs of closing the loan. While closing costs vary according to loan size and lending market, they typically range from $2,500-$4,000. If you paid to refinance and rates dropped lower you’d risk losing money. Enter the no-cost refinance.

A no-cost refinance carries with it a rate that is slightly higher. If rates dropped, however, you wouldn’t be wasting money if you elected to refinance at the new lower rate. Discuss this option with your lender and see if it’s right for you.

Lock in your interest rate.
Work with a lender that will pre-approve you for the refinance. That way, you can be assured you’re being locked into a program and a timeline your lender can meet. Plus, once pre-approved, it’s easier to lock in a rate when they may fluctuate day to day.

Because rates change almost daily, if rates drop after you agree to your rate lock, most lenders have policies allowing you to renegotiate to the lower rate prior to closing.

We have a lot more Scottsdale mortgage information for you in our Scottsdale Mortgage Info section of articles to your right just below our Scottsdale Real Estate Categories. We also update the mortgage situation constantly on Twitter and Facebook. Check us out there as well.

Scottsdale credit repair is very important these days. Good credit can ensure you get a preferred interest rate when you borrow and it's important to landlords when you rent. Insurance companies and prospective employers are using credit scores more and more. Because it's such a hot topic, if you have credit blemishes or bad credit, getting that fixed is receiving more attention than ever before.

Tips for Scottsdale Credit Repair

Taking the necessary steps to improve or repair your credit can be something you undertake yourself. Still, others use the services of credit repair professionals. If you choose to work with a Scottsdale credit repair agency there are things you should know.

Some so-called "professionals" aren't totally legitimate. They will try to talk you into starting a new credit file by getting a new tax ID number, the equivalent of a Social Security number for businesses. Don't do it. It's downright illegal.

In addition, don't dispute all the bad marks on your credit history. When you do that, the credit bureaus are obligated to remove them from your report while they're being investigated. With those items temporarily off your report, some people will apply for new credit accounts. Don't do that, either. It's fraudulent and can lead to additional problems including legal consequences.

Another often used trick of the unscrupulous credit repair trade is to charge upfront to repair your credit. Don't fall for that. It's against the law. The law says the services have to be performed prior to being paid for them.

One last Scottsdale credit repair tip: if an agency says only they can do things that you can't, don't buy it. If you're being promised a quick fix or dramatic results, you're being misled.

 

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Scottsdale homeowners are enjoying higher home values and are using their equity to take cash out of their properties by refinancing. Surprisingly, however, they are doing it conservatively –– more than any other time in recent history. A closer look reveals why that may be the case.

Scottsdale homeowners are enjoying higher home values and, as a result, are using that equity to take cash out of their properties by refinancing.

"Take Only What You Need" – Scottsdale Homeowners

In earlier times, such as the years leading up to the housing crash in 2008, homeowners regularly used their properties like ATM machines, taking as much cash out as their lenders would legally allow. With values inflated and equity almost non-existent, the amount they refinanced for was high compared to the home's worth. That and other actions led to millions of American homeowners being "upside down" or "underwater" on their mortgages. Ultimately more than 7 million homes ended up in foreclosure.

Since then, lending practices have been shored up dramatically to safeguard against the same thing happening again. In addition, today's borrowers are considerably more risk conscious – and are slower to add debt they don't need. Homeowners are still borrowing against their equity, with 42% of refinances in 2015 being for the purpose of taking cash out, not just refinancing to get a lower interest rate.

For most recent refinances, the average cash-out amount was slightly more than $60,000 and the average LTV ratio was 67%, the lowest level in history. The total amount of equity received through refinances in 2015 topped the $64 billion mark, the highest amount for any 12-month period since 2008-2009. Despite the record amount, homeowners showed remarkable fiscal restraint by not tapping into the remaining equity.

Economists say consumers are saving more now than they did during the years immediately after the housing crash. According to the Commerce Department, the savings rate in December 2015 climbed to the highest level in over three years. In addition, the borrowers refinancing to get cash enjoyed an average credit score of 748 – high for homeowners seeking refinances. This reinforces the position of mortgage lenders being risk-averse, but it's also a sign borrowers are taking only what they need. Simply put, they're leaving money on the table.

While Scottsdale homeowners still have most of their equity intact, they seem to be just fine with that. The memories of financial crises like the housing crash or even the Great Depression has had a lasting, memorable effect on a generation who vows not to go through it again. Plus, since interest rates on savings accounts have been so low, many baby boomers are staring at retirement wondering how they'll manage. Other workers of all ages have learned to look at their finances more cautiously. They've seen high unemployment, and they know the horrors of losing a home to foreclosure.

As a result, Scottsdale homeowners in today's economy take out only what they need when they refinance or get home equity loans. They begin paying it back almost immediately every month. For home equity loans, some banks require amortized payments, but not all do.

Borrowers typically are using their cash equity for home improvements, college tuition and rising health care costs. This is in stark contrast to the borrowers of just a decade ago, when home equity was used to purchase luxury items like boats, RVs, vacations and other extravagances.

We have a lot more mortgage related tips and information for you here.. just click on the Scottsdale Mortgage Info section of articles below Scottsdale Real Estate Categories to your right. We also post mortgage related information frequently on Facebook and Twitter. Be sure to find us there as well.

Scottsdale mortgage lenders have “seen it all.” With banks paying low interest rates and the stock market in the midst of a mini-crash, it’s tempting to just keep your cash at home. However, if you’re planning to buy a home and need that cash for a down payment you’d better rethink that investment “strategy.” You won’t be able to use it unless it’s accounted for.

Getting a Scottsdale mortgage will not be any easier with cash, and could in fact, muddy the waters.

Scottsdale Mortgage Market: Cash Isn’t King

In a recent survey by American Express, 57% of consumers say they have cash in a bank account. Surprisingly though, 53% admitted to keeping additional cash stashed in their home.

If you’re preparing to go to a loan closing, cash isn’t king. You’ll need a cashier’s check from a bank or other financial institution. One mortgage lender says, “Cash on hand is unacceptable… No title company is going to accept (actual) cash… at the closing.” The lender will view the cash with a big red flag, and will assume it was gained illegally — despite your claims to the contrary.

Nowadays, real estate agents and mortgage professionals are keenly aware of the possibility of money laundering. Even bringing a modest amount of cash to a closing could prompt the filing of a Suspicious Activity Report with the Financial Crimes Enforcement Network (FinCEN) of the U.S. Treasury Department.

In a 10-year study from 1996-2006, FinCEN reported that 20% of residential real estate sales transactions earmarked as suspicious showed evidence consistent with money laundering.

If the financial institution can’t document a legitimate source of the cash, even a mortgage pre-approval letter from a Scottsdale mortgage lender is virtually useless. A pre-approval letter states there is sufficient income, assets and a qualifying credit score for financing. The pre-approval is still subject to final verification by a credit underwriter at the mortgage lending company.

As a result of the Secure and Fair Enforcement for Mortgage Licensing Act of SAFE Act of 2008, and increased safeguards on “stated income” loans in the Dodd-Frank law of 2010, lenders must account for every dollar in a mortgage lending transaction.

In addition, the Patriot Act in 2001 tacked on more restrictions to discourage terrorist groups from money laundering in mortgage transactions.

Cash savings must be on deposit in a financial institution account to be counted as part of the overall asset evaluation. Plus, it has to be in the account at least 60 days for mortgage lenders to term the cash “sourced and seasoned.” A cash gift from a relative must also be documented to make sure that money isn’t considered a loan which may hurt the borrower’s debt to income ratio.

Scottsdale mortgage lenders advise if you’re planning to buy a home with a mortgage loan, deposit the cash into a bank account as soon as possible. Don’t be surprised when your bank files a Currency Transaction Report (CTR) with the IRS. Even smaller cash deposits over short periods to “fly under the radar” of the legal reporting limits of deposits over $10,000 will be reported.

Despite the warnings, mortgage lending experts say around 5% of loans each year involve cash money issues. Most of them can be ironed out — as long as the borrower informs the lender early in the process.

Get more Scottsdale mortgage tips and information by looking up our other articles in the Scottsdale Mortgage Info list of articles under Scottsdale Real Estate Categories. We also post mortgage related news and information on our Facebook page and on Twitter. Check us out there as well.